Cove Raises $13M for Wichita Retail DST
Cove Capital Investments has fully subscribed its Cove Saddle Creek Kansas 109 DST, raising nearly $13 million as the alternative investment manager continues to expand its lineup of debt-free Delaware statutory trust offerings.
The Regulation D, Rule 506(c) offering raised $12.95 million from accredited investors. The DST owns Saddle Creek Crossing, a multi-tenant retail center in Wichita, Kansas, that Cove acquired earlier this year in an all-cash transaction.
The roughly 110,000-square-foot center was 96.37% occupied at acquisition, compared with retail vacancy of approximately 3% in the local market, according to Cove. Average in-place rents were $7.71 per square foot, versus market rents that the sponsor estimated at $12 to $16 per square foot. Cove acquired the property for approximately $93 per square foot, below its estimated replacement cost of $180 to $200 per square foot.
“We believe the retail center combines a strong occupancy base, a diversified tenant mix, below-market rents, and an attractive acquisition basis in a retail market with limited vacancy,” said Dwight Kay, managing member and founding partner of Cove.
The property includes national, regional and local retailers and service businesses. Cove principals also invested alongside investors in the offering.
The DST carries no permanent mortgage financing, eliminating refinancing and lender-foreclosure risks. The offering also provides for a potential optional Section 721 Exchange, which could allow investors to contribute their DST interests to an UPREIT in exchange for operating partnership units if such an opportunity is offered.
The closing extends a string of recent Cove subscriptions, including the $9.3 million the Cove Fort Worth Small Bay Industrial 96 DST, $27.2 million Cove Texas Build-to-Rent 97 DST and $27.7 million Cove Diversified Portfolio 88 DST.
Cove manages a nationwide real estate portfolio spanning more than 4.3 million square feet across 139 properties.
Pictured: Saddle Creek, Kansas property.
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